I have long been of the belief that extended warranties offered on any product are an absolute waste of money. The benefit that you get out of them is usually zero, and most companies know that. For the majority of all products which generally have this extended warranty, their average lifespan far outweighs the short time of these extended warranties. On a side note, I am the type of person that likes to buy a brand new electronic (whether it is a laptop, flat screen TV or something else) and keep it for a long time. So if there were ever a person that an extended warranty was designed for, it would be me.
Reasons Not To Buy Them
Often, people don’t realize that many of their products have fairly low repair rates, which should dissuade them from purchasing these warranties. A few other great reasons to never buy an extended warranty are that, a lot of times, this extended warranty merely overlaps a warranty that is already in place by the manufacturer and comes at no extra cost. Also, a lot of credit card companies offer product protection coverage as part of their deal, so you could be covered under that as well.
Lastly, and perhaps most importantly, these products generally should not break on their own. These companies’ reputation depends on their products’ reliability and the companies would go down the drain if there was a always a TRUE need for warranties. Of course this also depends on how well you take care of your product (and there is admittedly a little bit of a luck factor involved as well).
OK, so I guess we can all say that we should never ever buy an extended warranty, right?
Wait a minute…
Never? Never ever?
Recently, a few personal experiences of mine and a little research have led me to shift my opinion on this topic a little bit. I purchased a laptop for my wife about a year ago from one of the major retailers and of course, I turned down the warranty. A few months back, they sent me a “birthday card” for my laptop. It was pretty cute, but if you ask me, it was their roundabout way of telling me that the manufacturer’s warranty was up on the laptop.
Well, as luck would have it, not even a few weeks later, I started having problems with it. It would just turn off for no reason. I had a few of my computer “experts” look at it, and they all came back with the same wonderful news that it was the motherboard. Yep, the motherboard was shot and there was nothing that could be done. Sure, I could replace it at close to the cost of the laptop itself, but what good would that do? Obviously, had I bought the extended warranty, it would have been covered.
Next, one friend of mine and one family member recently had about the same experience with their flat screen TV. Shortly after the one year was up (standard time frame for a manufacturer’s warranty), they both had what I call “catastrophic” issues with their televisions. By “catastrophic” I mean something went wrong with it that made no financial sense to fix as opposed to buying a new one. Neither had purchased any kind of extended warranty, so they were both out of luck.
So this led me to do just a little bit of research.
A Few Cold Hard Facts
These are the pertinent facts that I came up with:
- 43% of laptop computers, three to four years old, need repairs. Typical repair cost: between $100 and $400.
- Only 3% of flat screen TVs need repairs in the first three to four years, and most of the repairs needed were free anyway (that is, covered by the manufacturer’s warranty).
- No other item that I looked into (large household appliances, cars, and smaller electronics) even seemed to ever justify buying the extended warranty, as I suspected.
Extended Warranties: The Final Word
The ONLY time I would consider an extended warranty is for a laptop computer. And this would be after I had a thorough knowledge of the warranty and had looked around to see what competitors had to offer regarding a warrranty, and had researched the reliability of the brand name itself. Plus, it would have to be a laptop that was more expensive than $500. If you’re buying a Macbook or Macbook Pro for more than $1,000, it’s a good idea to get the extended warranty. If you’re buying a $350 Acer computer, the cost of the extended warranty won’t make sense. If it goes out on you in two years, just buying a new one is the best thing to do.
Contrary to what I originally thought, I still would NOT consider buying an extended warranty on a flat screen TV. The odds are simply too low. I thought long and hard about why I did not purchase that extended warranty for my laptop. But then I realized that if I added up the cost of all the extended warranties that I did NOT purchase over the years, this would have paid for the laptop itself. So, in the long run, I have saved. And, as stated in the beginning, I would never consider buying the extended warranty on any other consumer electronic item.
Some people buy these warranties anyways. I guess they both have the extra money and don’t mind spending it. Maybe they need the peace of mind, who knows. However, as the sales associate recently told me when I refused my latest offer of an extended warranty, if you decide to spend your money on these products without a warranty, “Proceed at your own risk.” The good news is that the chances of your consumer electronic item breaking within the first couple of years is highly unlikely.
(photo credit: dprevite)